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The Impact of Financial Support to Firms during Crises: The Case of Covid Aid in the EU

Author

Listed:
  • Giulia Canzian
  • Elena Crivellaro
  • Tomaso Duso
  • Antonella Rita Ferrara
  • Alessandro Sasso
  • Stefano Verzillo

Abstract

The Covid-19 pandemic caused a global economic crisis, leading governments to provide substantial State Aid to support firms. This paper examines the effectiveness of Covid-related financial support in Spain and Italy, focusing on its impact on firm recovery. Using a difference-in-differences (DiD) approach combined with propensity score weighting, it compares outcomes of similar firms receiving aid to those without. The results show significant benefits for micro-firms, including mitigated turnover declines and increased investments in both tangible and intangible assets. The findings highlight the critical role of government support in business survival and recovery, especially for SMEs, during the pandemic. .

Suggested Citation

  • Giulia Canzian & Elena Crivellaro & Tomaso Duso & Antonella Rita Ferrara & Alessandro Sasso & Stefano Verzillo, 2025. "The Impact of Financial Support to Firms during Crises: The Case of Covid Aid in the EU," Discussion Papers of DIW Berlin 2116, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp2116
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    References listed on IDEAS

    as
    1. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
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    3. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    4. Bighelli, Tommaso & Lalinsky, Tibor & Vanhala, Juuso, 2023. "Cross-country evidence on the allocation of COVID-19 government subsidies and consequences for productivity," Journal of the Japanese and International Economies, Elsevier, vol. 68(C).
    5. Matej Bajgar & Giuseppe Berlingieri & Sara Calligaris & Chiara Criscuolo & Jonathan Timmis, 2020. "Coverage and representativeness of Orbis data," OECD Science, Technology and Industry Working Papers 2020/06, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    State aid; aid effectiveness; temporary framework; Covid; firm growth; investment; difference-in-differences;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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